‘To echo what many publishing executives have been saying to us, 2011 will be the year when digital finally takes a significant and measurable share of UK ‘book’ sales.'

Philip Jones’s blog, January 2011

At the beginning of 2011, UK publishers anticipated that digital sales would account for anywhere between 3% - 7% of their total sales, whilst the final whistle hasn’t been blown for the year’s trading figures it already seems clear that many publishing houses are going to outstrip even these bullish predictions.

So far we have seen that the UK digital market has quite closely followed the sales graph mapped out in the US. At the beginning of 2011 most industry commentators agreed the UK was probably 18 months behind the US on the digital curve. In the course of this year all the sales figures suggest that gap has shrunk to only 12 months. In addition this festive season looks like being the one where e-reading devices will truly go mass market with the result that many UK publishers have their eyes on a bumper digital sales spike in January.

Whilst many face this burgeoning growth in digital with optimism, this is still tempered by uncertainty, this was probably best summed up by Macmillan’s Brian Napack when he said,

“This could be a golden age of publishing, but not necessarily for all publishers…”

And perhaps this is a good point to introduce the 400 pound gorilla in the room. 2011 was the year when Amazon really began to flex its digital muscle.

Amazon began encroaching on territory traditional reserved for publishers by providing self-published authors with a simple mechanism to publish and get paid for their work with the roll out of Kindle Direct Publishing. The success of this program can be seen in the run away successes enjoyed this year by self publishing stars Mark Williams, Louise Voss and Kerry Wilkinson who between them have sold over 150,000 eBooks this year.

Not content with offering a simple and effective platform for self-publishing, Amazon also re-affirmed its intent to compete directly with publishers with the launch of several new publishing imprints, a purchase of 450 children's titles, along with an increasingly aggressive recruitment strategy that saw some high profile talent grabs this year.

Traditional retailers obviously were not spared from Amazon’s continuing march and in what must be one of the cheekiest marketing moves in recent times ended the year by offering extra discounts to consumers using its price check app to order books – essentially enrolling their high street competitors as Amazon showrooms. How long before we see irate Waterstones managers turfing smartphone wielding customers out into the street?

Clearly publishers need to redefine their relationships with Amazon in new and interesting ways, as US commentator Don Linn points out ‘hating Amazon is not a strategy.’ Successful publishers will be the ones that find ways to harness the Amazon marketing and distribution machine for their own ends.

We can already see the success that UK publishers like Constable & Robinson have had this year. By engaging fully with Amazon they have seen digital go from a standing start to account for 12% of their turnover in 2011 and they’ve announced healthy profits at a time when many publishers are struggling. Certainly for now, engagement not estrangement seems to be the key.

At the end of 2011 the industry still seems to be split over the importance or otherwise of the enhanced e-book. Faber and Faber have had notable critical and commercial success this year with The Wasteland but their experience still seems to be the exception not the rule. Whilst there is no doubting that there is an appetite for apps among a certain section of consumers, the resources required to produce well thought out, jaw droppingly beautiful apps still means that they are beyond the reach of many smaller publishers who are facing other demands on their budgets. It will be interesting to see how this market develops in 2012. Will the enhanced e-book become part and parcel of the publishing process or will we see it settle down into a more boutique type product, very much the domain of large publishers with large development budgets.

Amazon was by no means the only organization that muscled in on the territory of traditional publishers this year. 2011 also saw the launch of Pottermore.com  the self-financed web hub of JK Rowling where she plans to exclusively sell the much anticipated digital versions of the Harry Potter books. With the launch of this ambitious platform, it seems this clever goose has decided to keep these particular golden eggs to herself. Surely other brand name authors will be looking on with interest at this potentially revolutionary development?

Back on the UK high street we are still waiting to see the impact James Daunt will have on Waterstone’s digital strategy. We have had a promise of an e-reader by the Spring of 2012 but so far that is the only hint we’ve had that Waterstone’s has the bones of the digital strategy that most commentators agree is vital to their future.

Recently the pressure on Waterstone’s to move decisively and quickly increased with new rivals like Kobo moving into the UK high street through their heavily promoted partnership with WH Smith. Kobo have been aggressively expanding this year and now with their recent acquisition by Japanese giant Rakuten they seem well placed to offer a well funded, credible alternative to the dominance of Amazon’s Kindle devices in the UK.

Clearly the industry faces some big challenges as 2011 comes to a close but if the recent Futurebook conference was anything to go by there does seem to be an undeniable mood of optimism in the air.

Despite the fact that the future seems to be arriving at breakneck speed it seems that publishers who are embracing the changes required are moving into a new and exciting era. The digital future is there for the taking and the UK publishing industry is well placed to stake their claim on it.